Saints & Sinners: Oil & Gas
() jumped as much as 20% to 18.96p during early trading before settling down around the 15p level after the company said that it has, today, exercised its option to participate in the drilling of the Shabeel North well, schedule to be spud in the first week of June. As a result of this decision to participate, Red Emperor maintains its 20% Participating Interest in each of the Dharoor Valley and Nugaal Valley PSAs. The rig is currently moving to the Shabeel North location, 3.5km north of Shabeel-1. The primary objective of this well will be to evaluate the Upper Cretaceous Jesomma Sands that have been oil-bearing at the Shabeel-1 location. Greg Bandy, Managing Director of Red Emperor, commented, "We are delighted to announce that we are participating in the second Puntland exploration well and as a result maintaining our 20% interest in this historical Joint Venture. We were very encouraged by the results of the Shabeel-1 well that have confirmed oil-bearing sands in two zones. This discovery has very positive implications for the prospectivity of the basin. We look forward to the results of the Shabeel North well and to testing the Jesomma sands to confirm the potential of the block." We (Fox Davies) as a shop have a BUY recommendation with a 65p price target.
() pushed 4% higher to 2.7p during afternoon trading after trading at an intraday high of 3p after the company said Managing Director Peter Hind has resigned with immediate effect to pursue his other interests and that Maxim Barskiy has been appointed Chief Executive. Hind will remain an employee of Matra until May 31, to help effect an orderly handover of his responsibilities, at which point he will leave the Company. Barskiy recently subscribed GBP4.6 million new equity into Matra and on May 14 joined the board as a non-executive director. Board continues to consider its senior management organization.
Holders of Gold Oil () continued to be frustrated waiting for the outcome of talks on the Z34 block in Peru, as the shares slipped another 6% to 4.2p during early afternoon trading. The shares are a long way from the 7.75p high only a few weeks ago. The last update on the Z34 block was back on the 8th of May when the company said it has received expressions of interest from a number of potential farminees in Block Z34, offshore Peru, following the planned date for receiving bids for acquiring equity in the block. Gold Oil will now progress discussions with interested parties with a view to firming up proposals and deciding on the next steps.
() jumped to an intraday high of 176.89p up 18.7% during early trading today, as speculation surrounding the company once again started to do the round. Ithaca did announce to the market back on the 23rd of January that it was in talks with potential suitors that may or may not lead to an offer being made. Being a Canadian company, they are not governed by the same takeover code as UK stock would be, so until they announce to the market once and for all, this sort of speculation will continue to swill. All this sort of speculation must be taken with a large pinch of salt until the company says something officially.
Chariot Oil & Gas () moved 8% higher to 78.5p during afternoon trading after the company said that in conjunction with its partners, its subsidiary, Enigma Oil & Gas Ltd, has reached an agreement with Ocean Rig UDW Inc. to use the Ocean Rig Poseidon drill ship to drill the Kabeljou--2714/6-1 well on the Nimrod prospect. The Poseidon, which is currently on a long-term contract with the Operator, is anticipated to arrive on location in July and the drilling operations will commence shortly thereafter. The Nimrod prospect is located in the Orange Basin in Southern Block 2714A where Chariot has a 25% equity interest. The Kabeljou well is expected to take 2 months to drill. This is the second well to be drilled in Chariot's 4 to 5 exploration well program offshore Namibia. Concurrently, the company is processing the 3D seismic data acquired from the recent survey carried out in the Central Blocks with initial results showing that the data quality is very good. Detailed analyses are due to commence on the samples from the Tapir South well shortly and once these evaluations are complete, and the results of the Kabeljou well have been assessed, the company will be in a position to determine the next wells of the drilling program for 2013.
The bulls were out in full force once again chasing () higher again today, pushing them up 8% to 124.5p to continuethe bullish tone set late last week when the company said that production for the first quarter of 2012 averaged 605 bopd,an increase of 40% on the same period in the prior year.Its cash position on March 31 was $154 million, excluding amounts related to the Ugandan tax dispute. Miran East-1 well is currently at a depth of 2,020 metres; operations on Miran East-1 well are on schedule and drilling is expected to take a further five months.
Top of the pops today in the Oil & Gas sector was Frontera Resources (), jumping 31% to 0.9p during afternoon trading, a touch off of the intraday high of 1p after the company said it expects monthly oil and gas sales to almost double in the third quarter of 2012 as it brings natural gas production wells online that had been delayed by poor weather conditions, a slower-than expected government permitting process and difficulty locating and modifying components. Since January, group oil sales generated average monthly revenue of $760,000. Frontera expects this to increase to $1.2 million with the start of gas sales in the third quarter. As the company looks to further develop its assets in Georgia and expand outside of the country, it said it is looking to utilize alternative funding sources, strategic partnerships, as well as its Standby Equity Distribution Agreement, or SEDA, during the second half of the year. Frontera said that due to downward pressure on its stock price--which has fallen over 44% in the last six months--it has been cautious in utilizing its $35 million SEDA facility in order to accelerate operations. It attributed the fall in its stock price to "significant follow-on sales volumes associated with last year's debt conversion"
Saints & Sinners: Mining
() was unchanged on the day at 1.625p at the mid-price after the company said it has raised GBP1.47 million via a placing of 95 million new Ordinary shares at 1.55 pence per share to a new cornerstone investor. Funds raised will primarily be used to advance Alecto's African resource portfolio through implementing systematic drilling and exploration programs. Cornerstone investor Mr Fahad Al-Tamimi is a successful businessman who is the founder and owner of a substantial diversified business group with its head offices in Riyadh, Saudi Arabia. Al-Tamimi also has the option to subscribe for further shares in Alecto in order to acquire a 29.9% stake in Alecto following completion of its current fundraising round. Additionally, Al-Tamini has received warrants in relation to the placing, and retains the right to appoint a director to the board of the Company. Exploration programs are also planned for Alecto's Ethiopian portfolio, which includes the 945 sq km Wayu Boda Gold Project, which has advanced artisanal workings, in the central-southern Adola greenstone belt, and the 1,953 sq km Aysid-Metekel gold license in the Aysid-Metekel region of north-western Ethiopia. Company is currently conducting due diligence at the highly prospective 711 sq km bauxite license 223 in Guinea.
() slipped 6.5% to 9p at the mid-price during afternoon trading, albeit on thin volume. The shares have continued to slide despite the company announcing First Quarter resultshighlighting that assayresultsfromALS Mineralsconfirmed preliminary results issued in December 2011 for drilling undertaken on the Palito South extension and the Piaui prospect. Independent results reported an average upgrade for gold assays of 8% and 14.9% respectively, compared with the preliminary reported results. NCL personnel visited Palito during March 2012 to undertake their field evaluation and gather the required data for the PEA. The Operational Environmental Licence for the Palito Mine was renewed by Secretaria de Estado de Meio Ambiente ("SEMA"), the state Environmental Agency for the State of Para. Corporate Highlights The Company completed a placing of 27,300,000 units on January 24, 2012 raising gross proceeds of UKÂGBP2.73 million Each of the 27,300,000 units were comprised of one ordinary share and one- sixth of one ordinary share purchase warrant of the Company, with each whole warrant being exercisable to acquire one Ordinary Share at an exercise price of UKÂGBP0.15 until January 23, 2014. NCL Ingenieria y Construccion SA ("NCL") were appointed to undertake an independent Preliminary Economic Assessment (the "PEA") into the viability of re-establishing mining operations at the Palito mine.
CIC Mining (LON:CICR) slipped 8% to 2.75p at the mid-price after the company said that it has sold shares in CIC Precious Metals Ltd (CICP) and Emulsion Fuel Ltd with attached warrants that have generated initial cash receipts of $300,000 in relation to the CICP transaction and GBP150,000 in relation to the Emulsion transaction to the company. The initial payment represents 10% of the full consideration that might be payable to the company in connection with these transactions. In respect of the CICP transaction, the balance of the purchase price which will not exceed $2.7 million will be payable within 3 years of the IPO of CICP. There is no guarantee that the IPO of CICP will be achieved or that the balance of the purchase price will be paid. Under both the CICP and Emulsion agreements the company has provided certain warranties and indemnities to the purchaser. As a result of these share transactions, the company now holds 31.5% of the issued share capital of Emulsion. CIC's holding in the issued share capital of CICP, however, remains at 48% as the shares which have been sold were new shares which were due to be issued to the company in payment of consulting and advisory services.
() dropped 11% to 3.875p at the mid-price during afternoon trading after the company said that it is proposing a capital re-organization whereby each ordinary share of 10 pence each will be divided into 1 new ordinary share of 0.1 pence each; and 1 deferred share of 9.9 pence each. Therefore, following the Capital Re-organization, the number of New Ordinary Shares held by each existing shareholder will be the same as the number of Existing Ordinary Shares held by them immediately before the Capital Re-organisation. The New Ordinary Shares will have the same rights and benefits of the Existing Ordinary Shares. The number of New Ordinary Shares in issue following the Capital Re-organisation will be unchanged from the number of Existing Ordinary Shares in issue immediately prior to the Capital Re-organization. The deferred Shares will not be admitted to trading on AIM, will have only very limited rights on a return of capital and will be effectively valueless and non-transferable.
The volume in () caught the eye once again today, with over 4.5 million shares changing hands before the end of lunch. The shares have been slipping over the last few session, but then there have not been many that have managed to hold up in the current climate. 1.9p to 2p looks to be a very stubborn old support line, and It will be interesting to see if the long term holders draw a line in the sand once again at this level.
() jumped 25% to 3.125p on huge volume after the company reported "bonanza gold and silver grade" drilling results from its exploration program at the Kiziltepe sector of the Red Rabbit Gold Project in Western Turkey. Drilling, which took place on the Arzu South and Arzu North veins at Kiziltepe, returned the highest grades ever recorded from the deposit, including 65.9 grams a metric ton of gold and 760 grams a ton of silver. "The grades and width of mineralization reported are greater than anything we have seen in the seven years that we have been exploring this deposit and importantly prove the high grade vein system extends under cover between the Arzu South and Arzu North structures," Managing Director Kerim Sener said. "The scale of the project continues to grow with further zones being identified that will only improve the economics of the project which we are advancing towards production." A total of 1,995 meters of diamond drilling has been completed at the Kiziltepe deposit since October 2011. The company noted that many of the drilling positions for the current exploration program were constrained by an existing forestry permit. Consequently Ariana will now need to identify optimal drilling positions ahead of obtaining new forestry permits for a deep drilling program in this area.
() pushed 7% to 1.5p on decent volume as long term holders continued to buy hoping for another update on the companies next gold pour. In the last RNS from the company back on the 9th of May they said that, since the main generator was repaired and processing of ore recommenced on April 5, the mining and processing operations have progressed well at the Nalunaq Gold Mine. Circuit is now well primed with gold and on May 6 Angel completed a gold dore pour of 19.295kg [538oz]. Future gold pours are planned on a three weekly cycle and, following the next gold pour, the mine and plant are expected to settle into a much more consistent period of cash generative production.
From the trading floor
The FTSE 100 finally had a very small relief rally, pushing 21 points higher to 5288 (+0.39%) on volume of 454 million shares by the 3pm hour. We are still a long way from the 5800 high seen only at the beginning of this month. The FTSE AIM All-Share index pushed 0.36% higher on volume of 880 million shares at the strike of the 3pm hour.
Gold - ↓Trading at $1588, down $4 (-0.22%)
Silver - ↓Trading at $28.13, down 62c (-2.14%)
Copper - ↑Trading at $7701, up $48 (+0.62%)
Zinc - ↓Trading at $1902, down $18 (-0.96%)
WTI Crude - ↑Trading at $91.89, up 44c (+0.48%)
Brent Crude - ↑Trading at $108.12, up 99c (+0.92%)